(Changes source, adds analyst’s comments and background)
Jan 9 (Reuters) - J.P. Morgan Securities upgraded Federated Investors Inc (FII.N), a leading money market fund manager, to “overweight” from “neutral,” citing strength in money market fund asset growth.
Analyst Kenneth Worthington, who raised his fiscal 2008 earnings view for Pittsburgh-based Federated on expectations of higher money market sales, said he saw some improvements in the firm’s equity and fixed income franchises.
“Solid money market performance in difficult market conditions seems to be leading to a flight to quality, with investors increasingly migrating to Federated money funds,” Worthington wrote in a note to clients.
He said structured investment vehicle exposure at Federated was limited to the highest quality products and exposure continued to be actively reduced.
Money market funds have long been popular with investors because they promise to return the dollar investors put in. They attracted more money than usual in August and September last year, when subprime mortgage problems came to a head and investors fled to safety.
Worthington raised his fiscal 2008 earnings view for the company to $2.70 a share from his prior view of $2.54 a share.
Shares of the company closed at $38.93 Tuesday on the New York Stock Exchange. (Reporting by Tenzin Pema in Bangalore; Editing by Anupama Dwivedi)